Archive for the 'Administration' topic

What is the business and capital as part of the business?

The business is defined as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. Every business in the world invests in capital needed, in order to utilize capital in performance, in order to produce output results. The capital must have a worth that justifies the investment costs for acquisition or development and implementation as capital solutions.

Capital is the investments in the business to have the capability to produce results

The only reason to invest in capital is to provide the capability to produce business results. Capital is all the tangible and intangible assets available to be utilized by the business. Capital includes the business organization, processes and systems, humans and their capabilities, facility equipment and supplies, management plans and tactics, and information capital. Capital has a worth in the capability to create result value attributable to the capital over the remaining capital life.

20^th century management fails to organize and manage capital as part of the business

Today, people think of capital as items in an asset register or on the payroll, rather than as items to be managed and utilized as part of the business. Businesses invest in enormous sums of money capital and then fail to identify the specific capital solutions developed, the costs of developing the capital, the worth of the capital as developed, the utilization of the capital to create value, the cost of capital utilization or consumption as capital worth deteriorates, and the value created to return the original investment. [more...].

Administration is one of the top ten problems of 20^th century management

20^th century enterprise management includes wasteful and counterproductive administrative functions

20^th century administration performs a function involving fixed routine tasks. Responsibility is for the function or the process of administering, rather than producing results. Administration is responsible for managing enterprise capital, but few administrators recognize this responsibility, in effect preventing proper capital management. Much capital is assigned to centers or labeled as “intangible assets”, removing it from professional management. Other capital is loosely administered through functions, instead of being specifically managed to produce benefit and achieve a return on the enterprise investment. The emphasis is on administrative performance rather than capital result management.

The solution is to replace administration with professional capital management

All enterprises invest large sums in the business to acquire or develop capital solutions. All enterprise capital investments must be organized for professional 21^st century business management for operation, support, development, and utilization to produce results. Administration is replaced with capital management. Capital managers must produce capital management results to develop, maintain, and improve the worth of capital to provide specific solutions. [more...]

Human resource development and management does not develop human capital precisely to produce valuable results and increase in worth

There is a lot of talk and writing about human capital, intellectual capital, knowledge management, and other means to improve the capabilities, productivity, and output of human capital. Despite the talk and writing, companies have never been able to integrate business process capability requirements, human capital capability development, qualified human capability deployment, human performance and cost, the value created by human performance, the value-added by human capabilities, and the worth of specific human capital.

Many companies proclaim that their people are their most important asset. But most of the companies manage human resources as employees, rather than managing human capital as assets. Many common human resource structures actually stifle human capital with contrived organizations and positions, position or job descriptions, salary scales, and career plans.

We can manage human capital effectively by managing the utilization of all capital in business performance to produce business results

The fundamental problem of 20^th century enterprise management used today is the failure to manage the business. The enterprise is managed through organization, planning, accounting, human resource management, performance management, and other structures laid over the business. The actual business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Investments in capital include human capital solutions in the personnel utilized, human capabilities developed, and human knowledge support developed.

All human capital solutions are utilized in business performance to produce specific business results. [more...].

Administration is one of the top ten 20^th century management problems

As explained in other articles in the Business Change Forum, administration is one of the top ten problems of 20^th century enterprise management used today. Enterprises have large sums invested in the capital that is utilized in performance, but most do not even know the extent of this capital. There is no manageable organization of capital as specific capital items of worth to be managed and utilized to create value in the business. Much high-worth capital is labeled as “intangible assets”. Capital that is known is administered, rather managed for investment, development, and utilization in operations. Many capital items requiring very different inherent capabilities and skills to support properly are mixed together in artificial categories like information technology and financial management.

Conventional administrative performance does not manage capital

Capital is created day in and day out without being recognized as something of worth that should be managed and made available to improve performance. Enterprises may have an assets register and think of managing capital as utilization of assets. Many think that managing capital means assigning it to a responsibility center, which actually removes capital from management for the benefit of the enterprise. Typical responsibility center managers do not take responsibility for managing capital and are unable to manage capital that they share with other responsibility centers.< [more...].

Human capital is administered as human resources and their worth in the value added to the business is unknown

In most enterprises, human resources are administered as employees and are assigned to positions in organization units. There is no way to measure the value they produce, evaluate performance costs against the value created, assess their worth as human capital, or to develop them to increase their worth and provide measured increased value to the enterprise. Administered employees do not have a defined stake in the enterprise.

The economic crisis shows that banks and other corporations do not plan, manage, and account for human worth in the value-added to the corporate business, giving rise to perceived unmanaged executive compensation and staff rewards. The only way to eliminate the problems that caused the economic crisis is to manage the business and to manage human capital as part of the business.

20^th century human resource management methods prevent good human capital management

There is a lot of talk about human capital, intellectual capital, knowledge management and other means to improve the capabilities, productivity, and output of human capital. But, each item is treated separately. We try to manage human performance, but have no framework to understand real human performance related to measured value to the business. We try to develop human capabilities, but have no framework to relate human capabilities to specific business needs. We have no way to integrate human capital performance with the value created and the worth of human capital.

We must manage the business to manage the worth of capital in development costs and the future value added to results produced

Before we can manage human capital properly, we must organize the business for 21^st century management. The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. We must identify and organizes the results needed for business success, the human and other capital solutions needed to produce results, and performance in the utilization of each solution to produce each result. We must manage the development and utilization of specific human capital solutions to produce measured result value, to increase capital worth, and justify increased performance costs.

We must improve human performance by managing the results humans produce

The key to making human capital a high-worth asset is to manage the results our enterprise produces related to human and other capital utilized. [more...].

Our Chief Information Officers (CIOs) have a problem, since one person is required to have many capabilities to manage diverse capital. The CIO has to have professional capabilities with management strategy, technology, equipment and network operations, information system logic, business organizations, and business processes. The CIO also needs to have capabilities with all types of enterprise information capital data, knowledge, records, and intelligence.The solution to the CIO problem lies in the organization of corporate capital to define capital as specific capital solutions, apply the distinct human capabilities needed to manage, develop, and support the capital solutions, and to manage the performance of capital solutions in utilization. The solution is provided by Result-performance Management (R-pM).

The CIO and IT manage diverse capital as technology

The CIO problem extends down from the CIO into the Information Technology (IT) function. IT has to have capabilities with the various capital as well. All the enterprises have problems somewhere or another, because organization and management structures are laid over the business, and IT does not have the capability to handle all of its capital support responsibilities.

We have such examples as:

• Many organization and management structures such as maps and plans, processes, accounts, activities, projects, functions, and scorecards are laid over the business requiring excessive IT resources to process
• Application systems are managed as technology and laid over the business rather than being integrated with the business process as part of the business
• Much high worth capital is labeled as “intangible assets” and is not defined or managed at all
• Each information system defines the enterprise differently creating information complexity and producing much conflicting information on enterprise operations and development
• The information complexity problems is addressed by more IT investments in data reconciliation, enterprise information management, and IT architectures
• The analysis of business improvement needs is separated from the business into IT, and needs are satisfied by technology rather than precisely-defined business improvements
• Business change is then often stuck in the technical IT backlog
• Users assistance is restricted to how to use technology per se and is no help in using technology to solve business problems
• Information is managed as technology, not as capital to be utilized
• Stress on data and records with little support capability for knowledge or intelligence
• System utilization is managed as availability or a service level, rather than supporting utilization of the system to create value

So, how do we solve the CIO problem and the problems faced by IT?

We now propose a Chief Technology Officer (CTO) to handle information and communication technology needs. The idea of splitting out management of our capital based on professional capabilities required is valid, but we must do it right.< [more...]

There are a wide variety of performance managers in 20^th century management. Performance managers may be responsible for human performance management, business performance management, capital performance management, or management performance. Similar performance management responsibilities remain under 21^st Century Management. But under 21^st Century Management, performance management responsibilities are precisely defined.

20^th century management mixes results with performance and manages both as performance

One serious flaw of 20^th century management is the definition of performance. Performance is defined to include not only the activity of performance but also the results produced from performance. This definition prevents 20^th century management from managing the business defined as “the activity of providing goods and services”. Both the activity and the goods and services are defined as “performance”. Performance management systems, business performance management, business process management, and other 20^th century management methods employ this definition.

The performance manager must work in a poorly defined environment. [more...]

Human Resource Managers are important capital managers

Are you a human resource manager? How do you approach your work? As a routine administration function? As responsibility for the enterprise human capital to ensure that human capital maintained ready to perform, is developed to acquire new capabilities to increase human worth, and provided with knowledge needed to provide value to the business?

If your answer is closer to the latter, you will clearly benefit from R-pM. The impact of R-pM on human resource management is explained in the Human Capital Management Forum, and in human capital articles, such as “Integrate Human Capability Capital with the Business” in 21^st Century Management Magazine. R-pM goes beyond 20^th century human resource administration to provide professional 21^st Century Human Capital Management.

Result-performance Management (R-pM) organizes the business for 21^st Century Management

The means to understand the actual business and the human capital that you support is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The human and other capital consumed in performance to generate the costs incurred by the business to produce result value

Even as human capital manager, you manage only these two entities in your business, as a sub-set of the enterprise business. [more...].

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]

Purchasing Managers are important capital managers

Are you a Purchasing manager, responsible for purchasing, maintaining supply inventories, and recording supply expenses? How do you approach your work? As a routine function? As responsibility for the enterprise supply line to ensure that the right supply capital items are provided on time to produce enterprise results?

If your answer is closer to the latter, you will clearly benefit from R-pM.

Result-performance Management (R-pM) organizes the business for 21^st century management

The means to understand the actual business that you support is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The capital consumed in performance to generate the costs incurred by the business to produce result value

You manage only these two entities in your business, as a sub-set of the enterprise business. Planning, gathering information, and managing other entities like activities, tasks, functions, positions, etc. diverts your time away from managing your business.

The 20^th century enterprise has never managed the business

The dilemma that you face is that your enterprise has never managed the business. [more...].